HUNTINGTON BEACH : Suit Filed Against Former Mayor Kelly

City Council candidate and former Mayor Jack Kelly has failed to pay $23,615 owed to the previous owners of his weekly newspaper, according to a lawsuit filed Friday.

In the suit, filed in West Orange Municipal Court, Jeff Brown and Allison Okada claim that Kelly agreed to purchase their majority interest in the Huntington Beach News for $20,000 last year, has been publisher since then, but has never paid.

The suit says Kelly was under contract to pay them the full amount by last August, a year after he took over the 86-year-old publication.

Kelly, who for six weeks this year discontinued publishing the paper because of financial difficulties, acknowledged that he has not paid anything for the transfer of ownership.

But Kelly said that Brown and Okada’s 65% stock shares in the newspaper were never officially transferred to him, because state permits required to complete the transaction were never filed.

Brown agreed that those documents were never completed, but the suit charges that Kelly agreed in a contract with the plaintiffs to submit the necessary permits to finalize the transaction. Kelly dismissed that allegation as “ridiculous.”

“It was an illegal transaction. . . . I don’t own any part” of the Huntington Beach News, Kelly said, although one of his campaign brochures advertises that he recently acquired the publication.

Considering that the suit was filed four days before the two-time former councilman will again seek election, Kelly said he believes the action against him may have been prompted by one or several of his opponents.

Brown said he wanted to file the case before Tuesday’s election to solve the matter before Kelly takes office, assuming he wins his bid for one of four contested council seats.

“Before he goes off and does something else, we’d like to see him take care of this,” Brown said.

The suit also seeks $3,614 from Kelly for a debt the newspaper has incurred since he took over its operations. Brown said that a bank has been seeking repayment from him and Okada because they remain the legal owners of the publication.